Yes debt does affect your business to borrow in the future, however in a good way! Watch to learn more about business debt.
Lets talk about debt!
Does debt affect your ability to borrow in the future? How does your business credit relate to your personal credit?
Well it starts in the beginning with your startup business. Think of it as a new born infant to the world of commerce. It has no credit history, no debt, basically no history good or bad. Often times at Innovative Lease Services, Inc. we are the first lender for new businesses. In most cases with new businesses we have to go by the personal credit of the person/people who(m) are starting the business. The personal credit tells us how they are going to pay their business bills. As the business matures the business itself, builds its’ own credit file. We at ILS report to a national credit reporting agency for business debt.
The new company then starts building its’ own credit file. Its’ ability to borrow by itself in the future will be greatly enhanced. In addition to that – creditors can look at the company as a stand alone entity, and how it pays its obligations. On the personal side, even thought the owner may have to personally guarantee the debt early on, that debt is not reported to the national credit report as revolving or installment debt. It is not reported at all to the personal credit report, as long as the debt is handled in accordance with the terms of the lease or EFA (Equipment Finance Agreement). So in recap, debt does not affect your personal credit but it enhances your business credit as it grows and matures.